American Silver Eagle Out of Stock Again?!

Last Wednesday (5th Nov 2014), the U.S. Mint announced they are temporarily out of stock for the world famous coin American Eagle. This is primarily due to low spot price for silver and tremendous demand for physical silver bullion.

american silver eagle 2014 out of stock

U.S. Mint said they will further announce when additional inventory will become available for sale, but did not provide specific details.

The similar out-of-stock incident also happened in year 2012 and 2014. (Click on the year link to the articles).

We know the price of silver has came down tremendously. But what good does it do if the producer is not selling any silver to the public? What is the point of low price if investors cannot get physical silver in their hands?

Paper silver might be an alternative for investors. However bear in mind that a big portion of silver demand came from industrial demand. Industrial means physical silver. You cannot give a stack of silver paper (contracts) to the manufacturers in China to produce iPhone 6 and solar panel!

The consecutive years of temporary out of stock from U.S. Mint basically is suggesting they are running their minting operation on a very thin level of available raw silver. They are unable to cope with a suddenly spike of demand, which happened in the last few weeks.

This is not the first time such happens. Does it mean they have not learn from the past years? Or does it means they are unable to secure larger amount of available physical silver for production?

Till date the sales for American Silver Eagle coin is as following:

sales

It feels really weird to me that silver – a limited precious metal on earth that have strong industrial application and investment demand is facing downtrend in price. Silver price movement is definitely not aligned with demand.

Again, silver is a finite resource on earth. One coin alone (American Silver Eagle) eats up average 40 million oz of silver each year in the past 4 years. When silver is used in industrial application, it is gone forever.

I’m wondering, how long more can the trend of low silver price yet strong demand continue?

Silver Malaysia eBookPractical Guide For Investing Silver In Malaysia is an eBook specifically written with a Malaysian’s context for silver investment. You will learn different strategies, practical tips and tricks for investing in silver. Click here to find out more.

New Low in Silver since 2010

Silver price hits new low since year 2010. The trend for silver price is bearish (potentially moving lower) as you can observe from this chart:

silver-short-term

According to Investopedia, this is known as descending triangle. The descending triangle is recognized primarily in downtrends and is often thought of as a bearish signal.

decending

If we zoom out and take a look at the longer term of silver price movement, the similar pattern can be observed as following:

silver-long-term

During this period, many investors took advantage of the low price to buy physical silver.

Take the one of the most famous silver coins – American Silver Eagle, the sales for 1oz coin in 2nd half of 2014:

  • July – 1.9 million oz
  • August – 2.0 million oz
  • Sept – 4.1 million oz (breakdown as following)
    • 1st to 25th Sept : 1,700,000 oz
    • 26th Sept : 700,000 oz
    • 29th Sept : 350,000
    • 30th Sept : 1,357,000 oz
  • Oct – 2.5 million oz (at the point of writing this), where
    • 1st and 2nd of Oct : 1,650,000 oz

If we put this into perspective, from 26th Sept to 2nd Oct (5 business days) there are total of 4.1 million oz of American Silver Eagle sold. That is just for 1 coin!

2014_American_Silver_Eagle_Dual

Silver investors are buying on physical silver as there is a clear disconnection between the physical demand and spot price.

These are some of the reason why physical silver investors believe in physical silver and took advantage over the low price.

  1. Global electronics demand.
  2. Global jewelry demand, especially in Asian.
  3. Global industrial demand (it is expected to grow 5% per year through 2016 and outpace global GDP growth).
  4. The number of new industrial applications.
  5. The number of new bio-medical uses.
  6. Photovoltaic (solar) demand.
  7. Volume on the Shanghai Futures Exchange, which already surpassed the COMEX in 2013.
  8. Perth Mint sales were 41.6% higher in August than July, and September sales were the 3rd highest of the year.
  9. Domestic demand in China, which is expected for the first time in history to exceed 250 million oz in 2014.
  10. Gold/silver ratio (getting close to five-year high).
  11. The difference between price and the cost of production.

Silver Malaysia eBookPractical Guide For Investing Silver In Malaysia is an eBook specifically written with a Malaysian’s context for silver investment. You will learn different strategies, practical tips and tricks for investing in silver. Click here to find out more.

Listen, Silver: We Need to Talk

Jeff Clark (Senior Precious Metals Analyst) wrote a letter to Silver last week in a fun way, and Silver answered back. Here is their exchanged emails:

Dear Silver,

Happy anniversary. It was on April 25, 2011 that you hit $49.80 per ounce in the New York spot market.

Today, three years later, you sell for around $20, nearly 60% less.

Is your bear market almost over—or are these low prices here to stay? Your price has lagged gold this year, so your normal volatility is lacking. How much longer will you be stuck?

Jeff Clark, Silver investor

Here’s Silver’s polite response:

Dear Mr. Clark,

I have good news for you. While some investors have lost interest in me and my price is at 2010 levels, things will soon change.

I put together this historical chart for you, and I hope you’ll share it with your fellow silver investors. It shows every major bear market over the past four decades. The black line represents what’s taken place from April 2011 through last Friday.

Of the seven prior bear markets, four lasted longer and three were shorter. Four declined less than today; two were about the same; and only one was significantly deeper.

If I were to match the two longest bear markets, my price would stay down until this October. If it matched the other two longer bear markets, it would end this summer.

Over the past 40 years, there has been no bear market that would extend my low past this October.

Or my low may already be in.

Either way, I think it’s safe to say that I’m close to the end of my down cycle. In fact, the historical data say the opportunity to buy me at $20 or less will soon be unavailable.

Let me relay some other data to you that also signal current prices can’t last too much longer…

The US Mint (Still) Can’t Keep Up with Demand

The sharp drop in my price in 2013 unleashed a wave of pent-up demand for silver coins. Look at the response from investors.

The question this year is if those record levels could continue to be supported. The first quarter is over, so I can tell you the answer…

The US Mint sold 13,879,000 ounces of me in Q1, 2.4% less than the 14,223,000 sold in the first quarter last year. Here’s the monthly breakdown:

  2013 2014  Gain/Loss
Jan. 7,498,000 4,775,000 -36.32%
Feb. 3,368,500 3,750,000 11.33%
Mar. 3,356,500 5,354,000 59.51%

January’s 36% decline from the prior year looks big, but it’s not what you think: the Mint didn’t begin sales until the end of the second week of the month. The monthly total thus reflects only 2.5 weeks of sales.

And March sales were the fourth-biggest month ever. Add in April’s sales figures and the US Mint is now on pace to exceed 2013 totals.

It’s clear that your fellow investors think my price will go higher.

Silver ETFs Have Net Inflows (Again)

You might remember that silver ETFs’ holdings were largely flat last year, unlike the mass exodus seen in gold funds. The pattern is continuing this year.

Holdings in my exchange-traded products (ETPs) have risen 3.5% year to date, an additional 17.5 million ounces. In fact, the net purchases by silver ETPs have totaled $354 million YTD, the largest influx of all commodity ETPs!

Meanwhile, gold-backed ETPs have seen sales of 500,000 ounces, about a 1% drop.

Jewelers Love Low Prices

Low prices for me have led to increased silver jewelry purchases.

As just one example, the UK reports that silver jewelry sales jumped 40.4% in February, to 351,791 items.

India Just Won’t Stop Buying

India imported 5,500 tonnes of me last year, 180% more than 2012. Imports comprised 20% of all global demand.

Last month’s silver imports were 250% lower. This was mostly due to the recent increase in import duties, and the fact that six banks got permission to import gold, which would soften purchases of me. This could partly explain why my price has struggled.

But as long as politicians keep gold restrictions in place, Indians will keep buying me.

China: More Silver for Solar

Chinese imports of me rose drastically in February, up by 75% month on month and 90% year on year to 358 tonnes, the highest since March 2011. Though lower the following month, March imports were up 16% year over year.

China’s solar industry is growing explosively. In 2009, it represented about 0.2% of the global market; this year, it’s estimated to be one-third.

It’s interesting to note that my price rose in February and fell in March, which suggests that Chinese demand affects my price, too.

Supply Sources Are Concerning

So far, suppliers have managed to meet demand. However, there are dark clouds on the horizon…

  • Very little excess supply is expected this year, as production is projected to remain flat, and demand for me shows no signs of letting up.
  • Solar power accounted for 29% of added electricity capacity in America last year. “More solar has been installed in the US in the past 18 months than in 30 years,” says the US Solar Energy Industries Association. “Eventually solar will become so large that there will be consequences everywhere.”
  • Supply from recycling will probably be weak, because it’s not cost effective to recover every tiny bit of me from cellphones or prescription eyewear or casino chips. One report says that Americans threw away 130 million cellphones last year, containing over 46 tonnes of me.
  • Several major base-metals mines are expected to be depleted over the next several years. The problem is that two-thirds of me is a byproduct from base-metals operations—if their output falls, there will be less of me, as well.
  • The Silver Institute says that demand for industrial products made from me continues to grow.

No Regrets

As I look at your current situation from a historical perspective, I see a lot of catalysts that will catapult my price higher in the near future. It seems rather clear that as demand continues to grow, supply tightens, and my role as money grows more substantial, I will trade at much higher levels in just a few short years.

In fact, I offered to bet my cousin gold that I will outperform him before this cycle is over. He declined to take the bet.

The clock is ticking. Don’t set yourself up for regret when my price leaves $20 in the dust.

Your friend,
Silver

Silver Malaysia eBookPractical Guide For Investing Silver In Malaysia is an eBook specifically written with a Malaysian’s context for silver investment. You will learn different strategies, practical tips and tricks for investing in silver. Click here to find out more.

Top 3 Recaps Silver Investment 2013

2013 has came to the end. Silver price has not been particularly exciting this year. Here are the top 3 events worth noticing:

1. April Price Drop

On 12th April 2013, silver price broke support at $26. $26 has been a strong support in the past. When silver price broke a strong support, the support will then become a strong resistance in the future. During this drop, some investor got panic because a strong support is broken. Most investors took this opportunity to buy silver at a discounted price.

support

2. American Silver Eagle coin sales created new record high

American Silver Eagle (ASE) coin sales is a good indicator to gauge investment demand for physical silver. The coin has a beautiful design yet the premium is relatively low among the other coins. That made ASE became a highly demanded silver coin in the world.

In 2013,  American Silver Eagle coin sales has created all time high sales record. Despite bearish silver price movement in 2013, physical demand for American Silver Eagle coin remained strong.

coin

3. 2014 silver price outlook

Technically, silver market is not over by looking at the major uptrend lines. The fundamentals continue to build in a favorable way for silver. The facts remain that gold is moving to China and India at rapid rate, Germany only received a fraction of their gold back. It will take another six years before the New York Federal Reserve will finish their delivery.

2014 will be a rebuilding year for silver to regain strength but not significantly. This is due to the ongoing currency debasement and the coming economic crisis. It is usually wise to buy when the markets are quiet and when investors are pessimistic.

Silver price is expected to be traded between $19 to $26. It might take several attempts to to break $26 before hitting $30 mark. However, it is always possible that something could take place to shift market sentiment overnight.

Silver Malaysia eBookPractical Guide For Investing Silver In Malaysia is an eBook written with a Malaysian’s context for silver investment. You will learn different strategies, practical tips and tricks for investing in silver. Click here to find out more.

Silver in Medical

Most people know silver as a form of investment. Apart from investment purpose, silver has wide industry application.

Silver-nugget

Health Care

Silver has a long history of being used as medicine. Hippocrates, also known as “the father of medicine,” discovered silver healing and anti-disease properties. During World War I, before the invention of antibiotics, silver was an important medical weapon to fight against diseases on the battlefield. In modern days, silver is added to bandages, wound-dressings and other medical instruments and is a key part of the technology behind X-rays.

Anti-bacterial

The ancients keep water, wine and vinegar in silver vessels to ensure freshness. Silver is able to remain the freshness by interrupting the bacteria cell’s ability to form the chemical bonds essential to its survival. These bonds produce the cell’s physical structure so when bacteria meets silver it literally falls apart. For this reason, silver enforced bandages are especially in demand. Bandages with silver ions prevent bacterial growth and speed healing time, making them especially valuable for treating burn and wound victims.

Today, consumer healthcare companies like Johnson & Johnson and others offer their own lines of bandages and ointments that use silver as an active ingredient. Silver has actually been proven to promote the growth of new cells, thereby increasing the rate at which wounds can heal.

Silver in Nanotechnology

For the last 120 years, the field of nanotechnology has been devoted to researching and developing new uses for colloidal nanosilver. Nanoscale silver particles have been used in pigments, photographics, wound treatment, conductive/antistatic composites, catalysts, and as a biocide. Its biocidal applications are among the most studied today.

Silver’s antibacterial qualities have applications that reach far beyond the medical world. Washing machines, refrigerators, air conditioners, air purifiers and vacuum cleaners all rely upon silver nanoparticles to sterilize up to 650 types of bacteria. Nanotechnology is still at a very early stage in terms of its usage. The full extent of its application remains to be seen but scientists and consumers are hopeful regarding the environmental implications of nanotechnology.

As a side note, on 3rd November 2013 I mentioned American Silver Eagle sales will be making new sales record, surpassing the all time high in 2011.

ase-sales

American Silver Eagle coin is a fairly good indicator to identify the demand for physical silver in investment. The coin is both low in premium and has a beautiful design. American Silver Eagle coin is the perfect silver investment coin. From this chart, we can tell that physical silver demand has been increasing every year since 2007, except 2012 which is not falling too far behind.

Silver Malaysia eBookPractical Guide For Investing Silver In Malaysia is an eBook specifically written with a Malaysian’s context for silver investment. You will learn different strategies, practical tips and tricks for investing in silver. Click here to find out more.

With Market, Without Price

Last week, the manufacturer of American Silver Eagle coin, United States Mint announced:

“The United States Mint will issue its last weekly allocation of 2013 dated American Eagle Silver Bullion coins on Monday, December 9, 2013.  We will begin accepting orders for 2014 dated American Eagle Silver Bullion coins on Monday, January 13, 2014.”

us-mint-close

What this means is, U.S. Mint will not be selling any American Silver Eagle coins for more than 1 month (between 9th December 2013 to 13th January 2014). This is not the first time U.S. Mint stop taking order. The similar announcement was made in late 2012 >> American Eagle Silver – Sold Out!

The record all time high sales for American Silver Eagle coin is 39.87 million oz in 2011. At the point of writing this article (3rd Nov 2013), the coins sales has reached 39.18 million oz. If you are reading this article in mid November (or later), I’m fairly confident the bullion coins would have made a new record by passing 2011 all time high record.

ase sales

In year 2011, there was major crash in silver price and sales went all time high. In 2013, there was another big drop and again, sales demand went up significantly. It seems that the lower the price goes, the higher the demand. This defies the basic supply demand principle and cannot go on forever. Physical silver is a finite resource with infinite demand and applications. When industrial usage used up the physical silver; when investors continue to buy physical silver at a rate and volume that increasing every year, physical silver will be used up (due to low price), and people will be wondering – now what?

It is ironic to see physical silver has highly demanded yet silver price has not significantly rise since 2011. The reason is because silver spot price is still largely controlled by paper silver price. This is a “with market, without price” situation, which means there are demand for physical silver but silver spot price did not catch up. Many physical silver investors are experiencing paper lost for holding the physical silver.

Malaysia property market is the opposite of this known as “with price, without market” situation. Property prices has been soaring for the passed 5 years. Transaction has been slow since early 2013, yet price did not drop significant. I was talking to a real estate agent over the weekend, he shared that he has one property being viewed for 13 times and yet could not sell it off. Many property investors are experiencing paper gain for holding their property.

Are these both illusions that would only clear themselves over time? Personally I’m in no rush of selling silver or buying more property. What is your game plan?

Silver Malaysia eBookPractical Guide For Investing Silver In Malaysia is an eBook specifically written with a Malaysian’s context for silver investment. You will learn different strategies, practical tips and tricks for investing in silver. Click here to find out more.

Silver Coin Malaysia

Before you buy silver coin Malaysia, first you need to understand that coin is also known as legal tender. Coin is issued by the respective governments and has face value. Example of coins are American Silver Eagle (ASE), Canadian Maple Leaf (Maple), Philharmonic (Phil), Chinese Panda, etc. Coins usually have finer details on the silver. The design is usually much more attractive and beautiful compared to silver round. In Malaysia, the best selling silver items are silver coins. First is ASE and second is Maple. If you are starting out in silver investment, go for ASE and Maple. Between these 2, I highly encourage you to buy ASE. ASE has silver purity of 99.9% while Maple has silver purity of 99.99%. Milk spot is relatively easily grown on Maple compared to ASE. The condition could be as bad as even when you bought Maple from overseas, milk spot is already on the Maple coin. All the above coins are not originally minted in Malaysia. But they are common silver coin Malaysia.

silver coin malaysia

Silver Coin Malaysia

Cleaning milk spot could be a very tedious job if you have a large amount of silver to be cleaned. If you are paying the same amount of money for both ASE and Maple, why bother to pay for additional problem? Another thing to take note on buying coin is there is 15% tax (tariff code HS7118) if you are importing silver from overseas. This is the reason why you might find some sellers are selling silver coin Malaysia more expensive than silver bar and silver round. However, there are dealers who managed to smuggle silver coin Malaysia and bypass the Kastam and tax, therefore their price for silver coin Malaysia is cheaper. Do note that among coins, they carry different premium. Some premium are higher and some are lower. Higher premium means the coin is more expensive. Lower premium means the coin is cheaper. Some premium is worth paying for due to certain characteristic such as limited mintage. However not all premium is worth paying for. I advise for a start, do not invest in high premium silver coins.

You probably do not know whether certain premium for silver coin Malaysia is worth paying for yet. If we compare silver with real estate, consider low premium silver as a medium class apartment while high premium silver like exclusive bungalow. For most novice silver investors, it is safer to invest in medium class apartment. In other words it is much safer to to invest in low premium coin.

Pros:

  1. Beautiful and attractive design. Well accepted by silver investors.
  2. Easiest to liquidate silver coin Malaysia (compared to bars and rounds).

Cons:

  1. 15% tax if you are importing from overseas. If you are buying from local dealers, most dealers have already included the tax into the price.
  2. Some coins carry very high premium, if you are not familiar with premium game very likely you end up losing money.

“Silver Coin Malaysia” is a sample chapter from Practical Guide for: Investing Silver in Malaysia.

Silver Malaysia eBookSilver coin Malaysia is simple when you understand coin characteristic. Practical Guide For Investing Silver In Malaysia is an eBook specifically written with a Malaysian’s context for silver investment. You will learn different strategies, practical tips and tricks for investing in silver. Click here to find out more.

7 Stages of Empire

India government attempted to slow down gold imports by implementing sharp tax increases. Silver – became the next target for investors. Silver imports increased drastically as there are no such import tariffs applied to silver.

The latest news from China has given silver yet another boost. Silver demand is both from the industrial and the precious metals investment sectors and China currently ranks as the world’s second largest silver consumer after the USA. China currently is the 3rd largest silver producer in the world. China is closely following Peru (world no.2 silver miner). If Chinese industrial growth is indeed beginning to recover, and with the better economic data coming out of the U.S. then silver’s industrial usage may be entering a good growth phase.

Chinese silver production and consumption have both been rising at an annual double digit percentage rate. There were fears that a Chinese slowdown would cut this rate of increase, so the news that the latest Chinese data was reporting stronger industrial growth, imports and investment gave a big boost to metal prices, with the volatile silver price perhaps moving most of all.

In last week article, I pointed that U.S. Mint sales for American Silver Eagle has been at record high level. This scenario suggests that investors’ interest in both East and West are going strong.

Silver Malaysia eBookPractical Guide For Investing Silver In Malaysia is an eBook specifically written with a Malaysian’s context for silver investment. You will learn different strategies, practical tips and tricks for investing in silver. Click here to find out more.

American Silver Eagle July 2013

American Silver Eagle coin is the best tool to benchmark the demand for physical silver. The sales number is very complete compared to other coins, and the demand is great all over the world.

2013_American_Silver_Eagle_Dual

In the first three months of 2013, investors were purchasing American Silver Eagle Coins at an average ratio of 48 to 1 to gold eagles. 48 to 1 ratio simply means for every 1 oz of American Gold Eagle Coin is sold, there are another 48oz of American Silver Eagle Coins are sold.

On April, ratio felt to 20 as investors found gold which dropped $200 in two days is a significant bargain. However, that does not mean silver did not gain investors’ attention. Total amount of American Silver Eagle coins sold in April was 4.087 million oz, which is higher than 2 previous months (February 3.369 million oz and March 3,357 million oz).

The ratio has went back up to 49 in May and slightly increased to 57 in June.

What I want to bring to your attention is the sales closed in July. US Mint has sold total of 4.407 million oz of silver, making July the second highest sales month for American Silver Eagle coins. (Traditionally, January is always the highest month due to market demand for new year design).

The ratio is 87, which means for every 1 oz of gold is sold, another 87 oz of silver is sold! (the following chart is slightly outdated as the figure does not reflect the final week in month of July)

Silver-Eagle-Sales-Ratio-To-Gold-Eagles

Total sales number of American Silver Eagle (ASE) coin is another interesting number to watch. Since 2007, total oz sold by US Mint is increasing noticeably. It reaches the peak in 2011 with almost 40 million oz sold. The interest of ASE peaked in 2011 as silver price dropped more than 30% in early May 2011.

Another interesting year to watch is year 2013. The latest sales number released by US Mint is 29.45 million oz as end of July 2013. This number has exceed the total sales number for whole year of 2009 (28.77 million oz). It is only slightly below year 2010 (34.67 million oz) and year 2012 (33.74 million oz) respectively. It is also just another approximately 10 million oz difference from the all time peak in year 2011 (39.87 million oz). Without a doubt, 2013 will mark a new history for ASE total sales BEFORE year end.

The reason for such strong demand for ASE coins is due to low silver price and investors believe it is a bargain to buy silver at such cheap price. In fact, the demand for ASE coin was so great that US Mint has suspended their sales twice in the last 12 months (December 2012 and January 2013) – stating US Mint has to replenish their inventory.

sales

Base on what happened in 2011 and what we are experiencing in 2013, apparently the lower silver price goes, the stronger the demand for physical silver. Silver is a precious metal that has limited supply on earth. The question is… how long can this sustain? And will you be holding physical silver when silver price explodes?

The following is one of the analysis in eBook Practical Guide For Investing Silver In Malaysia for American Silver Eagle coins:

American Silver Eagle Malaysia Rating

In the eBook, you will also learn the analysis other silver coins, silver round and silver bar. You will learn what are the factors that you should consider before investing in any silver. In fact, there are some silver that you MUST totally avoid!

Silver Malaysia eBookPractical Guide For Investing Silver In Malaysia is an eBook specifically written with a Malaysian’s context for silver investment. You will learn different strategies, tips and tricks for investing in silver. Click here to find out more.